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Annual Report of the Board Risk management

Seafarers’ Pension Fund 2022 Annual Report The Seafarers’ Pension Fund has a risk management plan in place,
which covers all its operations and is reviewed on an annual basis. The
14 plan includes the assessment of risks related to the Fund’s operations,
their probabilities and potential impacts on the Fund’s operations. The
Fund has also prepared, as part of its strategic decision-making and
risk management, a risk and solvency assessment in compliance with
Section 184a of the Seafarer’s Pensions Act (MEL). The assessment
includes a review of the impacts of all essential risks on the operations
of the Fund as well as those measures that are relevant for the purposes
of managing these risks.

As required by the Financial Supervisory Authority, the Board shall
approve the manner in which the Seafarers’ Pension Fund will imple-
ment its annual risk and solvency assessment. In 2022, the Fund con-
ducted a risk and solvency assessment that included a broad analysis,
complete with scenario calculations, which was commissioned sepa-
rately from an external party. The risk and solvency assessment were
discussed at the Board’s meeting in October 2022 and approved by the
Board at its meeting in November 2022.

By virtue of the law, the Seafarers’ Pension Fund shall draft, every
second year, an actuarial study to investigate whether the currently
valid MEL contribution basis is securing in terms of the Fund’s solvency
and the interests of the insured. In practice, the study is carried out
every year, and the confirmation of the MEL contribution by the
Ministry of Social Affairs and Health is applied for one year at a time.
The Administrative Regulations of the Seafarers’ Pension Fund became
valid on 1 December 2017.

The investment activities of the Seafarers’ Pension Fund are guided
by the general regulations governing all earnings-related pension
providers. When making investments, the baseline is to ensure the
reliability, yield and liquidation of the investments, as well as their
appropriate diversity and diversification. These bases for the investment
activities are stipulated in more detail in legislative provisions
on solvency and investment diversification.

The Board of the Seafarers’ Pension Fund annually confirms an
investment plan, which specifies the objectives, strategy, shorter-term
investment allocation, risks and decision-making authority related to
its investment activities. The aim of the Fund is to maintain its solvency
ratio at a minimum of 20 percentage points higher than the average for
earnings-related pension providers. Sufficient investment diversification
lowers the risk level of the portfolio without reducing its yield potential.
Diversification is the Fund’s primary means of reducing risks. Diversifi-
cation is implemented between and within the asset classes.

The aim of the data security policy of the Seafarers’ Pension Fund
is to protect the information, especially personal data, information
systems and services that are essential for the Fund’s operations, both
in normal and exceptional circumstances, by means of administrative,
physical and technical measures. The EU Data Protection Regulation
emphasises a risk-based approach and data protection by design, i.e.,
as the default, when processing personal data. Compliance with the
Regulation must also be able to be proven. The Seafarers’ Pension Fund
has drawn up comprehensive data privacy and data security docu-